OSCM Connect: Exam 3

Which is the correct formula for the annual ordering cost in the EOQ model?

(D/Q)S

Which is the correct formula for the total annual cost in the EOQ model?

(Q/2)H + (D/Q)S

Which of the following statements about inventory control systems is/are not true?

- An advantage of periodic systems is the lack of safety stock required. - UPCs and point-of-sale systems do not work well together. - Perpetual inventory systems are always able to accurately report inventory levels.

Which of the following are assumptions of the EOQ model?

- Annual demand is known. - Lead time is known.

Which statement about holding costs, also known as carrying costs, are correct?

- Carrying costs can be stated as a percentage of item price, - Carrying costs can be stated as a constant.

In order to meet or exceed customer expectations service quality is broken down into different dimensions or focus areas. Select all the dimensions of service quality below.

- Courtesy - Responsiveness - Convenience

Which of the following supply chain actions affect an organization's quality?

- Defects in purchased parts - Late or missed deliveries

Select the three different cost categories of Quality.

- Failure costs - Prevention costs - Appraisal costs

How do businesses with good or excellent quality products and/or services benefit?

- Greater customer loyalty - Increased market share - Ability to command premium prices

What secondary outcomes would result from fewer production or service problems in a business with good/excellent quality?

- Higher productivity - Higher profits - Fewer customer complaints

Which of the following statements about inventory costs is/are true?

- Holding costs can include the cost of insurance. - Ordering and setup costs are treated the same.

Which of the following statements about discrete stocking levels in the single-period model is/are true?

- If the SL is equal to one of the probabilities, both that level and the next higher one have the same minimum cost. - After finding the optimal service level, pick the next highest stocking level.

Which of the following statements is/are correct about Inspection?

- Inspection involves checking for conformance against a quality standard. - Inspection can occur before, during or after production.

Which is/are examples of Acceptance Sampling?

- Inspection of final assembly lots after production - Inspection of raw material batches before production

Which of the following statements about inventory management is/are true?

- Inventory managers must decide how much to order. - One of the goals is to keep inventory costs within reasonable bounds. - One of the goals is to achieve good customer service.

Which of the following statements about the A-B-C approach is/are true?

- It is intended to help firms allocate control efforts based on the relative importance of items in inventory. - Approximately 10% to 20% of items account for about 60% to 70% of annual dollar value. - Its purpose is to identify inventory items that are the most important to the business.

Which of the following statements about the single-period model is/are true?

- It is used for ordering items that have a limited lifespan. - It minimizes costs of shortage and excess.

Which of the following are considered types of inventory in a manufacturing facility?

- Maintenance and repairs - Raw materials - Work-in-process - Finished goods - In-transit goods

Which of the following phrases are most closely associated with Six Sigma programs?

- Master black belts - Process variability reduction - Defect reduction

What are some examples of inspection points in the service sector?

- Outgoing patient billing accuracy at medical clinic. - Kitchen cleanliness at fast food restaurant at shift start.

Understanding product quality dimensions can help an organization meet or exceed customer expectations. Select all the dimensions of product quality below.

- Performance - Durability - Aesthetics - Conformance

To translate quality into operational terms which of the following aspects are applicable?

- Performing a cost-benefit analysis on quality impacts - Recognizing the consequences of poor quality - Making ethical decisions in terms of the quality of product/service offerings

Which of the following statements about reorder point ordering is/are true?

- Safety stock is required if lead time is variable. - Safety stock is required if demand is variable.

Which of the following statements about inventory control systems is/are true?

- Some businesses are moving towards using RFID tags to track inventory. - Orders in two-bin systems may not be placed at the right time.

Which of the following statements about the EOQ model is/are true?

- The EOQ minimizes the sum of annual ordering and holding costs. - Orders are placed when there is just enough inventory left to cover the lead time demand.

Which of the following statements describe quality considerations for an organization's Operations Strategy?

- The best business organizations view quality as a never-ending journey. - Top management needs to be visibly involved and supportive in TQM for successful implementation. - All customers are concerned with quality.

Which of the following statements about inspection frequency are is/are correct?

- The more lots being produced the more inspections are needed. - A stable process will require less frequent checks than an unstable process.

Global supply chain quality problems/risks include which of the following?

- Variation too high in product output and does not meet specifications - Substandard materials or work methods used overseas - Lack of quality regulation and government inspections of producers

What are the key questions for management concerning cycle counting?

- When should cycle counting be performed? - Who should count it? - How much accuracy is needed?

Which of the following is/are the basic issue/s of inventory management?

- When to order - How much to order

What are the basic issues of quality control inspection?

- Whether to inspect attributes or variables - At what stage of the process inspection should occur - How much and how often to inspect - Where inspection should take place

Place the following steps for the A-B-C approach in the correct order.

1. Multiply annual volume by unit price for each item. 2. Arrange items in descending order by annual dollar value. 3. Classify the items as A,B,C.

Which is the correct formula for the economic order quantity?

2 DS / H √

Six sigma, a process improvement objective for many organizations, literally translates to how many defects per million opportunities?

3.4

Select the best definition of Quality Control.

A process that measures output relative to a standard and takes action when discrepancies occur.

The ______ approach classifies inventory items according to a measure of importance, such as annual dollar value.

A-B-C

What is the rationale and basis for statistical process control?

Acceptable variation within probability limits

What is the best synonym for inspection from the below list?

Appraisal

Which quality tool is useful in monitoring a process to detect the presence of correctable causes of variation?

Control charts

When the results of quality control are unacceptable, what is the next step?

Corrective action

Which of the following is the correct formula for the service level in the single period model with continuous stocking levels?

Cs / Cs+Ce

Which of the following is the correct formula for the service level in the single period model with discrete stocking levels?

Cs / Cs+Ce

Which scenario would indicate the need for off-site testing at a centralized testing facility?

Customer specifications for satellite component require dust-free, no vibration test

What is a good working definition of Quality?

Customer-dependent

_____ stock is the amount of inventory required to meet expected demand

Cycle

______ is a physical count of items in inventory used to reduce the discrepancies between inventory records and the actual items on hand

Cycle counting

What is the first step in the problem solving process?

Define the problem and establish an improvement plan.

What is a primary determinant of quality?

Design

Which of the following is not a way inventory affects performance measures?

Dividends

Which determinant of quality applies to how well instructions explain what to do with the product or service?

Ease of use

Which of the determinants of quality improves the likelihood that products will continue to function in the way in which they were intended to function long into the future?

Ease of use

T/F: In acceptance sampling, a type of quality control inspection, 100% of product in a given lot are checked for conformance.

False

T/F: The dimensions of product quality are the same as for service quality.

False

T/F: To meet or exceed customer expectations, product quality performance is less than customer expectations.

False

Match the Quality Tool with the description.

Flowchart = Diagram of process steps Check Sheet = A tally of problems/events by category Histogram = Empirical frequency distribution chart Pareto Chart = Diagram arranging category frequencies from highest to lowest

Which of the following is an example of making "Time," a service dimension of quality, measurable?

How long did the customer have to wait?

Which of the following types of inventory are items that are ready to be sold?

Independent-demand items

An example of liability as a result of poor quality is which of the following?

Lawsuit damages paid out from faulty product design

What does LT represent in the reorder point formula?

Lead time

The four major areas affected by poor quality are which of the following?

Loss of business, liability, productivity, costs

The dimensions of quality are too abstract to be operationalized (acted upon) and must subsequently be broken down and made what?

Measurable

One dimension of Quality is product Performance. Match the customer expectation result with the different performance relationship

Meets: Performance = Expectations Exceeds: Performance > Expectations Doe not meet: Performance < Expectations

Which of the following is true about following the steps of problem solving?

Monitor the solution to see if goal is accomplished comes after Implement the solution

Which quality tool focuses attention on the most important problem area by showing the relatively few factors which account for a large percentage of total cases?

Pareto analysis

________ inventory systems take physical inventory counts at fixed intervals and decide how much to reorder of each item.

Periodic

______ inventory systems continuously keep track of changes to the inventory system and a fixed quantity is ordered when the amount on hand reaches a predetermined level. Multiple choice question.

Perpetual

Inspection during transformation is called what?

Process control

Which of the following determinants of quality refers to the degree to which goods and services achieve the intent of designers?

Quality of conformance

Which of the following determinants of quality refers to the inclusion or exclusion of certain product or service features?

Quality of design

Which dimension of quality is shared by both products and services.

Reliability

Which quality tool is useful in deciding if there is a correlation between the values of two variables?

Scatter diagrams

In the single-period model, what is the key to determining the optimal stocking level?

Service level

_______ cost is incurred by a firm when demand for inventory exceeds supply.

Shortage

Successful management of quality requires what?

That managers have insights on various aspects of quality

What is a broad definition of Quality?

The ability of a product/service to consistently meet or exceed customer requirements or expectations.

Select the best definition of appraisal costs with respect to Quality.

The cost of inspection, testing, and other activities intended to uncover defective products or services.

Which is the definition of holding cost in the EOQ model?

The cost to carry a single unit in inventory for a length of time.

Which of the following is NOT a normal function of inventory?

To provide an investment vehicle.

T/F: One of the reasons offshore suppliers have lower costs than domestic may be lack of government regulation and inspections.

True

Which of the following statements about inventory turnover is not true?

Turnover is the ratio of sales to inventory.

The overall objective of inventory management is to achieve satisfactory levels of ______ while keeping inventory ______ reasonable.

customer service; costs

Which is the correct formula for the reorder point with no variability?

d x LT

One reason firms carry inventory is to ______, that is, to use inventory as a buffer between successive internal operations to avoid disruption in the event of equipment breakdowns or accidents.

decouple operations

A service level of 95% implies a 95% probability that __________.

demand will not exceed supply during leadtime

In order to rank inventory items in an A-B-C analysis, we arrange annual dollar values for all items in ______

descending order

The four primary determinants of Quality such that a product or service satisfies its intended purpose are _______.

design, conformance, ease of use and after-delivery service

There is too much inspection when the cost of inspection is __________ the cost of passing defectives.

greater than

With inventory turnover, a _____ ratio is better, because that implies more efficient use of inventory.

higher

Because firms tend to have about 30 percent of current assets invested in inventory, a reduction in inventories can result in a significant ______.

increase in ROI

The inventory models in this chapter relate primarily to ______ items, that is, items that are ready to be sold or used.

independent-demand

Manufacturing firms have used _____ as buffers between successive operations to maintain continuity of production that would otherwise be disrupted by events such as breakdowns of equipment and accidents that cause a portion of the operation to shut down temporarily.

inventories

A stock or store of goods is _______.

inventory

How much to order, and when to order, are the two basic issues in an _______.

inventory ordering policy

MRO stands for ______ inventory.

maintenance and repairs

Service level is the _____ that demand will not exceed supply. Service level = 100% - _____ _____.

probability; stockout; risk

Statistical process control is ______.

quality control efforts that occur during production

In the single-period model, _____ cost is the unrealized profit per unit, while _____ cost is the difference between the purchase price and salvage value of an item.

shortage; excess

One of the reasons a firm carries inventory is to ______, that is, to achieve constant output and use inventory to meet overly high requirements during seasonal periods.

smooth production requirements

Inventory is a _____ or _____ of goods.

stock; store

One basic issue of inspection is what type of data to collect. If we can measure the value of a characteristic, we are collecting ______ data.

variable